Confession: Cypher Protocol Developer Admits to Stealing $300K in User Funds and Squandering Them on Gambling
Ruholamin Haqshanas
Last updated:
May 15, 2024 08:26 EDT
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2 min read
In a surprising revelation, an anonymous developer working for Cypher Protocol, a Solana-based platform, has come forward to admit that they embezzled approximately $300,000 worth of user funds and lost it all through gambling.
The confession was made in a public statement released on May 14 by the developer, who goes by the name Hoak. Hoak confessed to stealing the funds from the cross-margin decentralized exchange (DEX) on the Solana blockchain.
This confession came after another contributor to Cypher Protocol, known as Barrett_io, raised concerns about the missing funds. However, it wasn’t until a member of an undisclosed Discord group reported issues with fund withdrawals that the post gained attention.
Barrett_io revealed that Hoak had stolen the funds over several months by making 36 withdrawals from the Cypher redemption contract. The stolen funds were then transferred to an intermediary wallet before being sent to the Binance exchange.
Data compiled by Barrett_io shows that Hoak’s address sent approximately $317,000 worth of Solana, Tether USDT, and USDC to Binance. CoinStats data indicates that at its peak on December 7, Hoak’s wallet held around $68,365 worth of digital assets before the funds were sent to Binance.
On April 22, the wallet still had over $56,000 worth of digital assets. However, within the next two days, over 99% of the assets were transferred elsewhere.
This incident is a significant setback for Cypher Protocol, as it has been working hard to recover from a previous hack in August 2023, where over $1 million worth of digital assets was stolen.
Hoak attributed the theft to a severe gambling addiction that spiraled out of control. Although he acknowledges that he may not receive understanding for his actions, he hopes to shed light on the correlation between gambling addiction and participation in the cryptocurrency space.
Critics of the industry often draw parallels between cryptocurrency and gambling due to its speculative nature. This comparison has been further reinforced by Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC), who likened the crypto ecosystem to “casinos in the Wild West,” with stablecoins being compared to poker chips.
A survey conducted by YouGov in 2023 revealed that individuals with gambling addictions were nearly five times more likely to own cryptocurrencies than the general population, highlighting the connection between gambling addiction and crypto trading.
In another significant incident, BlockTower Capital, a digital asset investment firm, fell victim to fraudsters who partially drained their main hedge fund.
Despite these recent hacks, the cryptocurrency industry experienced a decline in combined losses from hacks and scams in April. It recorded the lowest amount of losses since 2021, with approximately $25.7 million lost to attacks and scams throughout the month. This marks a positive trend in the industry’s security measures.
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